Fear the Faux FIRE Philosopher!

The FIRE movement is experiencing quite a bit of media representation. It’s the new, hot thing!

The idea behind the FIRE- which stands for “Financial Independence Retire Early” is really quite simple. You save a significant portion of your income. Invest it in a relatively conservative manner, usually through indexing. Perhaps you have a side gig, real estate, or another income stream. When you have enough saved so that you can survive on a withdrawal rate somewhere between 3-4%, you retire. There are several flavors, but they really just variants of a theme-

LEAN FIRE: where you spend very little. If you keep your income needs small, you’ll be more likely to amass enough savings to reach your goals.

FAT FIRE: This is primarily in the wheelhouse of high earning professionals. The idea is that you earn 200k or more annually and you amass enough wealth to maintain that income as you retire early.

BARISTA FIRE: You kind of retire, but you keep working a low skill and likely low paying job that supplies some basic cash influx and benefits

Flexible FIRE- where you retire until a recession hits, crap your pants out of fear, and then you jump back into the job market, realizing that your initial amount of savings way underestimated the reality of being out of work for 40 years.

I think the FI and FIRE movement are overall great ideas.

I especially think FI or “Financial Independence” is one of the most important trends in personal finance in the last decade.

What could be healthier for this country than individuals taking charge financial futures? It’s a much better outcome than relying on the Feds to bail out social security or a pipe dream that pensions will come back in a big way.

There are many “anti-FIRE” bloggers out there. Many of them fueled by jealously or a sense of moral outrage about doctors not working themselves into the grave for the good of the hospital administration. I’m not one of them. It’s your money and you should do with it what you like. If more doctors retired early, it would force the health care system to improve pay and working conditions to attract physicians to stay. This post is not about this. It’s about the harm that FIRE bloggers are causing on the financial health of their fellow physicians.

The rise of the Faux FIRE Philosopher.

As someone who has been active in the physician financial planning community, mostly through working with doctors to negotiate their best physician contracts, I have seen a troubling trend in the FIRE community. Mainly, that most “FIRE” bloggers are nothing of the sort. They are not “retired”, nor do they meet the commonly understood idea of what it means to be retired.

On the surface, this shouldn’t matter all that much, right? I mean, if the information is good then it doesn’t change the value.

But that’s where I have come to disagree. Imagine you are typical 35 years old physician who is married and with kids, and having to pay off their own student loans. You come from a middle-class family and have had zero financial advice growing up. You are now trying to get your financial life in order for the first time. You read a post where some 38-year-old claims to be FI or FIRE. They have no loans, no mortgage, 250k in a 529 for their kids, and 10 rental properties.

What is the typical 35-year-old physician to do? I would imagine the great majority would read the FIRE posts and come to the conclusion that they are never going to be anywhere near the FIRE bloggers status in 8 years, maybe 15, and certainly not 3 years. Quickly, they will give up and return to their head- in-the sand and hope-for- the best-plan.

Overall, by setting up false hopes and unrealistic scenarios, the FIRE community and the bloggers within it may be causing more harm than they realize.

Cajun Joyce is retired. Most FIRE bloggers are not.

Cajun Joyce, Cajun Bob’s 77-year-old Mere (“mother” in Acadian French) is retired. No one in their right mind would look at her finances and think she is anything else but retired. She has Social Security Income and several pensions from her own work history and as a surviving spouse. There is a small amount of dividends rolling in as well from investments over the years. Her health care is covered by Medicare. She does not work. She does not file a W2, 1099, or K-1. She needs to live off a clearly defined income. Her assets are not likely to increase, except as part of COLA raises. There is just no income coming in. As someone who is retired, she does not work at an occupation. Although, she is very active in volunteer work.

Most FIRE Bloggers are not retired. They simply aren’t.

Just because you do a job that is different than the one listed on your college degree, doesn’t mean you are retired.

They have blog money income, real estate income, consulting fees, and actual W2 and 1099 jobs as well. If you have an income rolling in that requires anything beyond filing a 1099-DIV or similar during tax time, you are not retired. So what, they have some money coming in? What difference does that make? In my opinion, only the whole meaning of FIRE.

Anyone can “retire” and still work!

Especially, if you are bringing in 50-80k or more annually. That’s as much as the typical American family earns! It’s a deception, whether done purposefully or not. There is no way any reasonable person would look at the tax return of a typical “FIRE” blogger and consider them “retired”.

And then there are the flat-out faux FIRE philosophers. The ones who are willfully “non-transparent”. I’ve lost track of how many FIRE bloggers claim to be retired when they are actually stay at home spouses and the spouses that are working full time bringing in salaries at the 95th percentile. Or the folks who have their houses and student loans covered by their parents and now claim to hold the secret to being financially independent. Let’s not forget the 3rd generation of doctors inheriting a large sum along with financial support every step of the way. Being in the financial situation where you get to stay home and spend time with your kids is great. I wish I were that lucky. But if you claim you got there through a financial plan and your own gumption, when you did not, it is harmful in the long run. Even the founder of the FIRE movement, Vicki Robin, inherited her money. You rarely hear that mentioned.

Yes, the easiest way to become a millionaire doctor is to start with two million.

When you can retire at 38 starting off with 450k worth of student loan debt, a mortgage, 2 elderly parents, and 3 kids, you will have my attention.

I’m sure there are many FIRE folks out there who have retired in the classic sense. We just don’t hear from them too often. They don’t have blogs.

Note: there are two common theme among FIRE bloggers that tend to be more honest and transparent. Firstly, they tend to be military doctors. Their student loans are covered through military service. They also tend to choose well paying specialties where they are able to do shift work like Anesthesia, Critical care, and Emergency Medicine. The shift work affords them time to develop other income streams. You can see, from a purely financial standpoint, that this is a great model. But, it’s probably not what many of us planned as our medical careers. Joining the Military is a great path and one I greatly respect, but you really need to be committed to the idea. Cajun Joe, Cajun Bob’s uncle served in Vietnam and his experience was beyond nightmarish. He still suffers, really suffers, to this day. And, many of us cherish the relationships we form with our patients over the years, For me, it’s the best part of the job. I’d rather go into banking than do medical shift work. The point is, what works for others may not work for you. Make your choices based on what will make you happy. Then make the sacrifices you need to make to become FI.

What is the typical doctor to do? The first thing to do is to ignore the noise of the FIRE movement and focus in on the signal. There’s more smoke than FIRE most of the time anyway.

FI is absolutely doable. You can reach a point where your investments cover your expenses, barring unforeseen catastrophes (and you will insure yourself against these). Anyone can reach FI, not just highly compensated professionals. Do not just frustrated or give up. Focus on FI.

There is a natural progression here. A sequence that you should consider to reach your results.

Aim for FI by increasing your savings and reducing expenses. This is discussed in many places. Search “live like a resident” if you aren’t familiar with the concept.

The most important element to your success is how much income you can save/invest/use to pay down debt as a percent of your salary

Instead of retiring early, consider a goal of working part-time in a job you enjoy. One that provides health benefits and a decent salary. One, where you also feel like you make a difference.

Retiring early is great, but unrealistic for many. Health care costs alone could make this impossible. If you do get there, fantastic. If you don’t get there, don’t fret. Remember, most of the people who “retire early” don’t really retire. They just bring in income that is in a field other than what they majored in college.

Like most doctors, you probably have zero formal training or experience in negotiation. Don’t let your lack of professional skill development leave thousands or tens of thousands on the table. We just may be the missing piece you need to really succeed.

What are your thoughts? Have you been discouraged to see how far ahead some FIRE bloggers seem to be compared to the rest of us? Have you been to the point where you feel like giving up? Are you close to FIRE and have want to share your path? Let is know in the comment section.